Bloomberg News

Fitch Revises Slovenian Banks Outlook on Capital Needs by State

By Boris Cerni
February 01, 2012

Feb. 1 (Bloomberg) -- Slovenia’s state-owned banks, including the largest Nova Ljubljanska Banka d.d., had their outlook revised to negative by Fitch Ratings after the company cut the sovereign rating of the euro region country.

Fitch affirmed NLB and Nova Kreditna Banka Maribor d.d.’s long-term issuer default ratings at BBB and revised their outlooks to negative from stable, the rating company said in a statement today.

The revision reflects the “negative outlook on the sovereign, and hence the potential for further weakening of the Slovenian government’s ability to provide support to the banks,” Fitch analysts led by Lindsey Liddell and Michal Bryks said in the statement. “There is a significant risk that the sovereign will need to contribute heavily to future bank recapitalization in Slovenia.”

Slovenian lenders are still struggling with the impact of the 2009 recession with the worsening economic outlook for this year probably increasing their reserves to cover bad loans. Slovenian lawmakers on Jan. 28 nominated Janez Jansa as the new Prime Minister to replace the government of Borut Pahor that was toppled in September. The new Cabinet may be in place by Feb. 10, according to Gregor Virant, one of the partners in the five- way coalition.

Fitch cut the ratings on Slovenia by two levels to A from AA- on Jan. 27 because of a lack of financing flexibility in the face of the debt crisis in Europe.

The rating company today also downgraded the government- guaranteed notes of NLB and Abanka Vipa d.d. to A from AA-, according to the statement.

--Editors: Zoe Schneeweiss, James M. Gomez

-0- Feb/01/2012 16:51 GMT

To contact the reporter on this story: Boris Cerni in Ljubljana at bcerni@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net -0- Feb/01/2012 16:15 GMT